Saks feels retail pinch

Thursday

NEW YORK — The recession may be kinder to value-minded retailers, but there's plenty of pain to go around in the results reported yesterday.

NEW YORK — The recession may be kinder to value-minded retailers, but there's plenty of pain to go around in the results reported yesterday.

Luxury retailer Saks Inc. reported a loss and issued a downbeat sales forecast for the year as it struggles to hold on to its affluent shoppers, while off-price retailer TJX Cos. reported flat sales — but better profit than expected.

Even bargain hunters are being stingy amid the widespread promotions and discounts.

With a spending slump expected to persist through the year, both companies are preserving cash by embracing cost-cutting, including slashing inventory and cutting capital spending.

Saks assured investors that it had sufficient liquidity to pull through 2009 and dispelled any rumors of bankruptcy. That sent shares soaring as much as 11 percent.

Shares in TJX, which sells discounted name-brand clothing and household goods, rose as much as 8 percent as investors were encouraged by its plan to cut $150 million in costs — and by reports that the discounter is already benefiting from the liquidation of Linens 'N Things.

"We're intensely focused on the future and positioning the company to be an even stronger organization when the economy improves," said Steve Sadove, chairman and chief executive of Saks.

The New York-based retailer, which operates Saks Fifth Avenue, said it lost $98.75 million, or 72 cents per share in the quarter ended Jan. 31. That compares with a profit of $39.47 million, or 26 cents per share, a year ago.

Excluding the after-tax loss from discontinued operations of $15.8 million, Saks recorded a loss of $82.9 million, or 60 cents per share. The charge is associated with the company's announcement in November that it was discontinuing its Club Libby Lu store division. Sales dropped almost 15 percent to $835.5 million.

Saks reiterated its plan to cut inventory receipts 20 percent this year. It's also eliminating some suppliers to respond to depressed demand, delivering merchandise to stores that shoppers can wear right away, cutting 1,100 jobs and taking other steps to trim costs about $50 million to $60 million in 2009.

Saks predicts that same-store sales for the full fiscal year will decline by low-double digits.

Shares rose 24 cents to $2.09, still near the low end of its 52-week range of $1.50 and $17.28.

TJX said that its fiscal fourth-quarter profit fell 17 percent due to the strong dollar and a difficult holiday season, but its adjusted results topped analyst expectations.

The Framingham, Mass.-based operator of stores such as T.J. Maxx, Marshalls and HomeGoods reported net income dropped to $250.7 million, or 58 cents per share, from $301.1 million, or 66 cents per share, a year earlier.

That sent shares of TJX up $1.58, or 7 percent, to $23.12 in late trading.

Revenue for the period ended Jan. 31 dipped 0.2 percent to $5.38 billion.

Still, Carol Meyrowitz, TJX president and chief executive, said the dismal environment could provide opportunity. She estimated store closures and retail bankruptcies will result in 1,200 fewer retail stores and a $10 billion market share opportunity. And she said HomeGoods stores that have been open at least a year and are near shuttered Linens 'N Things stores have seen "substantial" increases in same-store sales.

Same-store sales overall fell 2 percent during the quarter, and TJX predicts they will fall in the mid-single digits throughout 2009.

TJX expects earnings from continuing operations in the current quarter of 32 cents to 38 cents per share; analysts expect first-quarter profit of 35 cents per share.

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